The nation’s economy slowed last quarter, according to the Associated Press, growing at an annual rate of 1.6% in a sign that the high interest rates may be taking a toll on borrowing and spending.
Today’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — decelerated from its brisk 3.4% growth rate in the final three months of 2023. Consumers continued to drive growth in the January–March quarter but slowed their spending. Growth was also held back by businesses reducing their inventories.
The economy’s gradual slowdown reflects, in large part, the much higher borrowing rates for home and auto loans, credit cards, and many business loans that have resulted from the 11 interest rate hikes the Federal Reserve imposed in its drive to tame inflation.
Even so, the United States has continued to outpace the rest of the world’s advanced economies.
Businesses have been pouring money into factories, warehouses, and other buildings, encouraged by federal incentives to manufacture computer chips and green technology in the U.S. On the other hand, their spending on equipment has been weak. International trade is also thought to have been a drag on the economy’s first-quarter growth, as imports outpace exports.
